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Price of gas falls, but not at pump

Falling fuel prices mean greater profit margins for gas station owners for now. But this doesn't mean they're getting rich.

Associated Press
Published February 18, 2006

Gas station owners in many parts of the United States are buying fuel at some of the lowest prices they've seen in a year, yet many are padding their bottom lines rather than passing along all the savings to motorists, industry figures show.

Nationwide, the profit margin on a gallon of gasoline has widened since the start of the year and is 20.7 cents a gallon - almost double the historical average - thanks to the growing spread between wholesale and retail prices.

Many gas stations have struggled in recent years, industry trade groups contend. Rising credit card transaction fees chip away at profits per gallon, and competition has intensified as discounters like Wal-Mart Stores Inc. and Costco Wholesale Corp., increasingly sell cheap gasoline as a way to lure customers into their stores.

The past few weeks have been pretty good for the industry, though.

Gasoline futures have fallen 30 cents, or 17 percent since Jan. 30, while average pump prices have declined just 7 cents, or 3 percent, over the same period. Nationwide, the average retail cost of regular unleaded is $2.28 a gallon, according to the Department of Energy.

In the Tampa Bay area, prices at the pump averaged $2.26 on Friday, according to AAA Auto Club South. The range locally was about $2.13 to $2.39, down a few cents from a month ago.

This week's average profit of 20.7 cents a gallon for retailers is up more than 11 cents from a month ago, according to data from the Oil Price Information Service of Wall, N.J.

For AAA spokesman Gregg Laskoski in Tampa, the statistics lend credence to complaints from consumers about gas prices that seem to rise like a hare and fall like a tortoise.

"You always hear criticism that when wholesale prices come down there always seems to be a delay when the retailer follows suit," Laskoski said.

Over the course of a year, retailers say their average profit is about 10 cents a gallon. While some states have laws preventing gas stations from selling fuel below cost - a measure intended to prevent predatory pricing - there are no state or federal regulations limiting how much retailers can charge.

"This industry more than any other is regulated by the customers and competition," said Jeff Lenard of the National Association of Convenience Stores.

Retailers said falling prices are beneficial because it leaves motorists with more money to spend on food and beverages, an increasingly important revenue stream.

Times staff writer Jim Thorner contributed to this report.

[Last modified February 18, 2006, 02:00:25]

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